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CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,         Mylapore,    Chennai - 600 004. Tel: +91 - 44 - 249...
INTRODUCTION         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,                                 • A  T...
PERSONS INVOLVED IN TRUST         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,         Mylapore,        ...
Cntd..         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,         Mylapore,    Chennai - 600 004. Tel:...
Creation of trust - Indian Trust Act 1882         CHENNAI3rd Floor, ‘Creative Enclave’,                                 • ...
Cntd..         CHENNAI3rd Floor, ‘Creative Enclave’,                                 • The person who reposes or declares ...
Main Instrument         CHENNAI3rd Floor, ‘Creative Enclave’,   • The main instrument of any public charitable trust is148...
Types of Trusts         CHENNAI3rd Floor, ‘Creative Enclave’,                                 • Two types of trusts can be...
TRUST OF MOVEABLE & IMMOVEABLE                                             PROPERTY         CHENNAI3rd Floor, ‘Creative En...
Difference in creation of trust                                  of Immoveable and moveable.         CHENNAI3rd Floor, ‘Cr...
Discretionary Family Trusts         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,        • A family trust...
Unit Trust         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,        • A unit trust is like a company ...
Hybrid trusts         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,                                 • A h...
Formalities         CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,        • Intention. There must be a cle...
Purposes         CHENNAI3rd Floor, ‘Creative Enclave’,                                 • Privacy. Trusts may be created pu...
Cntd.         CHENNAI3rd Floor, ‘Creative Enclave’,   • Remuneration Trusts. Trusts for the benefit of148-150, Luz Church ...
CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road,         Mylapore,    Chennai - 600 004. Tel: +91 - 44 - 249...
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Trusts

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  1. 1. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 TRUSTS BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 EMAIL VALLI.A info@altacit.com WEBSITE www.altacit.com
  2. 2. INTRODUCTION CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • A  Trust is a relationship whereby Property (real or Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 personal, tangible or intangible) is held by one party for BANGALORE the benefit of another. Suite 920, Level 9, Raheja Towers, 26-27, M G Road, • It arises when property is transferred by one party to be Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 held by another party for the benefit of a third party. COIMBATORE BB1, Park Avenue, # 48, Race Course Road, • It is also possible for a legal owner to create a trust of Coimbatore - 641018. Tel: +91 - 422 – 6552921 property without transferring it to anyone else, simply by declaring that the property will henceforth be held for the benefit of the beneficiary • A trust in simple terms an agreement whereby a person EMAIL or company agrees to hold an asset for the benefit of the info@altacit.com others. WEBSITE www.altacit.com
  3. 3. PERSONS INVOLVED IN TRUST CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, • Settlor - Who transfers his property to the trust Chennai - 600 004. Tel: +91 - 44 - 2498 4821 • Trustee - who receives the property by the settler, BANGALORE Suite 920, Level 9, Raheja Towers, and who controls the asset is known as the ‘trustee’ 26-27, M G Road, Bangalore - 560 001. he has legal title to the trust property The trustee Tel: +91 - 80 - 6546 2400 COIMBATORE owes a fiduciary duty to the beneficiaries, who are BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. the "beneficial" owners of the trust property. Tel: +91 - 422 – 6552921 • Beneficiary - who is receiving benefit out of the trust. Beneficiaries have equitable title to the trust property EMAIL info@altacit.com WEBSITE www.altacit.com
  4. 4. Cntd.. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE SETTLOR PROTECTOR Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Contribution of Consent require Tel: +91 - 80 - 6546 2400 Assets for some action COIMBATORE BB1, Park Avenue, TRUST # 48, Race Course Road, Coimbatore - 641018. (THE Tel: +91 - 422 – 6552921 TRUSTEE) Distribution BENEFICIARIES EMAIL info@altacit.com WEBSITE www.altacit.com
  5. 5. Creation of trust - Indian Trust Act 1882 CHENNAI3rd Floor, ‘Creative Enclave’, • According to sec 3 of Indian Trust Act 1882, a trust is148-150, Luz Church Road, Mylapore, Chennai - 600 004. an obligation annexed to the ownership of the Tel: +91 - 44 - 2498 4821 BANGALORE property, and arising out of a confidence reposed in Suite 920, Level 9, Raheja Towers, and accepted by the owner or declared and accepted 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 by him for the benefit of another or another and COIMBATORE owner. BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. • Different states in India have different Trusts Acts in Tel: +91 - 422 – 6552921 force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied. EMAIL info@altacit.com WEBSITE www.altacit.com
  6. 6. Cntd.. CHENNAI3rd Floor, ‘Creative Enclave’, • The person who reposes or declares the confidence is148-150, Luz Church Road, Mylapore, Chennai - 600 004. called the author of the trust Tel: +91 - 44 - 2498 4821 BANGALORE • The person who accepts the confidence is called a Suite 920, Level 9, Raheja Towers, 26-27, M G Road, trustee Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 • The person for whose benefit the confidence is COIMBATORE BB1, Park Avenue, accepted is called a beneficiary. According to sec 4 of # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 Indian Trust Act a trust may be created for any lawful purposes • Trustees : A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees EMAIL info@altacit.com WEBSITE www.altacit.com
  7. 7. Main Instrument CHENNAI3rd Floor, ‘Creative Enclave’, • The main instrument of any public charitable trust is148-150, Luz Church Road, Mylapore, Chennai - 600 004. the trust deed, wherein the aims and objects and Tel: +91 - 44 - 2498 4821 mode of management should be enshrined. BANGALORE Suite 920, Level 9, Raheja Towers, • In every trust deed, the minimum and maximum 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 number of trustees has to be specified. COIMBATORE BB1, Park Avenue, • The trust deed should clearly spell out the aims and # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 objects of the trust • It should be clearly specified about how the trust should be managed, how other trustees may be appointed or removed. EMAIL info@altacit.com WEBSITE www.altacit.com
  8. 8. Types of Trusts CHENNAI3rd Floor, ‘Creative Enclave’, • Two types of trusts can be created and Registered as148-150, Luz Church Road, Mylapore, Chennai - 600 004. per Indian Trust Act 1882 Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, • a. Trust of immoveable property Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 • b. Trust of moveable property COIMBATORE BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 The Three most common types of trusts are: • Discretionary Family Trusts • Unit trusts • Hybrid Trusts EMAIL info@altacit.com WEBSITE www.altacit.com
  9. 9. TRUST OF MOVEABLE & IMMOVEABLE PROPERTY CHENNAI3rd Floor, ‘Creative Enclave’, • A trust of immoveable & moveable property may be148-150, Luz Church Road, Mylapore, Chennai - 600 004. created upon satisfying following conditions: Tel: +91 - 44 - 2498 4821 BANGALORE • Declared by a non-testamentary instrument in Suite 920, Level 9, Raheja Towers, 26-27, M G Road, writing signed by the author of the trust Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 • Indicating with reasonable certainty to create a trust COIMBATORE BB1, Park Avenue, # 48, Race Course Road, • Purpose of the trust Coimbatore - 641018. Tel: +91 - 422 – 6552921 • The beneficiary and the trust property and transfers the trust-property to the trustee • The instrument should also signed by the trustee, and registered. EMAIL info@altacit.com WEBSITE www.altacit.com
  10. 10. Difference in creation of trust of Immoveable and moveable. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 • The important difference in creation of trust of BANGALORE immoveable property and trust of moveable Suite 920, Level 9, Raheja Towers, 26-27, M G Road, property is that the former requires the instrument Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 to be registered unless it is created by the will of the COIMBATORE BB1, Park Avenue, author and in the later there is no condition to be # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 registered and however proper proof for transferring the ownership of the property to the trustee is required. EMAIL info@altacit.com WEBSITE www.altacit.com
  11. 11. Discretionary Family Trusts CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • A family trust is the most common trust used by small Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 to medium size business owners, investors and medical BANGALORE Suite 920, Level 9, professionals. They are generally set up to hold a Raheja Towers, 26-27, M G Road, family’s assets and/or business for the benefit of Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 providing asset protection and tax planning for family COIMBATORE BB1, Park Avenue, members. # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 • From a tax perspective the main advantage is that any income generated by the trust from business activities and investments, including capital gains can be distributed to beneficiaries in low tax brackets to significantly reduce taxes. EMAIL info@altacit.com • Assets held in a family trust cannot be attacked by WEBSITE www.altacit.com creditors or lawsuits.
  12. 12. Unit Trust CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • A unit trust is like a company where the trusts Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 property are divided into a number of shares called BANGALORE Suite 920, Level 9, units. The number of units you hold will determine Raheja Towers, 26-27, M G Road, your entitlement to your share of income, capital Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 gains and voting power. Units in a unit trust can also COIMBATORE BB1, Park Avenue, be categorised. For example you can have income # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 units and capital units. Also unit holders can be individuals, companies or discretionary trusts. • The taxation benefits are generally not as flexible as a discretionary trust in that any income distributions must be distributed to unit holders as per their share EMAIL info@altacit.com of units. WEBSITE www.altacit.com
  13. 13. Hybrid trusts CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • A hybrid trust takes the best features of a Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 discretionary trust and the best features of a unit BANGALORE trust and puts them into one. This means that the Suite 920, Level 9, Raheja Towers, 26-27, M G Road, trustee has the discretion to distribute benefits to the Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 beneficiaries of the trust – to beneficiaries who are COIMBATORE BB1, Park Avenue, on low tax rates, as well as have unit holders who are absolutely entitles to a portion of the benefits. # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 EMAIL info@altacit.com WEBSITE www.altacit.com
  14. 14. Formalities CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, • Intention. There must be a clear intention to create a Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 trust BANGALORE Suite 920, Level 9, • Subject Matter. The property subject to the trust must Raheja Towers, 26-27, M G Road, Bangalore - 560 001. be clearly identified Tel: +91 - 80 - 6546 2400 COIMBATORE • Objects. The beneficiaries of the trust must be clearly BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. identified, or at least be ascertainable. In the case of Tel: +91 - 422 – 6552921 discretionary trusts, where the trustees have power to decide who the beneficiaries will be, the settlor must have described a clear class of beneficiaries EMAIL info@altacit.com WEBSITE www.altacit.com
  15. 15. Purposes CHENNAI3rd Floor, ‘Creative Enclave’, • Privacy. Trusts may be created purely for privacy148-150, Luz Church Road, Mylapore, • Spendthrift Protection. Trusts may be used to protect Chennai - 600 004. Tel: +91 - 44 - 2498 4821 beneficiaries (for example, ones children) against their own BANGALORE Suite 920, Level 9, inability to handle money. Raheja Towers, 26-27, M G Road, Bangalore - 560 001. • Wills and Estate Planning. Trusts frequently appear in  Tel: +91 - 80 - 6546 2400 COIMBATORE wills  BB1, Park Avenue, # 48, Race Course Road, Coimbatore - 641018. • Charities. In some common law jurisdictions all charities Tel: +91 - 422 – 6552921 must take the form of trusts • Unit Trusts. The trust has proved to be such a flexible concept that it has proved capable of working as an investment vehicle EMAIL • Pension Plans. These are typically set up as a trust, with the info@altacit.com employer as settlor, and the employees and their dependents WEBSITE www.altacit.com as beneficiaries
  16. 16. Cntd. CHENNAI3rd Floor, ‘Creative Enclave’, • Remuneration Trusts. Trusts for the benefit of148-150, Luz Church Road, Mylapore, directors and employees or companies or their Chennai - 600 004. Tel: +91 - 44 - 2498 4821 families or dependents. BANGALORE Suite 920, Level 9, Raheja Towers, • Corporate Structures. Complex business 26-27, M G Road, Bangalore - 560 001. arrangements, most often in the finance and insurance Tel: +91 - 80 - 6546 2400 COIMBATORE sectors, sometimes use trusts among various other BB1, Park Avenue, # 48, Race Course Road, entities in their structure. Coimbatore - 641018. Tel: +91 - 422 – 6552921 • Asset Protection. • Tax Planning. The tax consequences of doing anything using a trust are usually different from the tax consequences of achieving the same effect by EMAIL another route. info@altacit.com WEBSITE www.altacit.com
  17. 17. CHENNAI3rd Floor, ‘Creative Enclave’,148-150, Luz Church Road, Mylapore, Chennai - 600 004. Tel: +91 - 44 - 2498 4821 BANGALORE Suite 920, Level 9, Raheja Towers, 26-27, M G Road, Bangalore - 560 001. Tel: +91 - 80 - 6546 2400 COIMBATORE BB1, Park Avenue, THANK YOU # 48, Race Course Road, Coimbatore - 641018. Tel: +91 - 422 – 6552921 EMAIL info@altacit.com WEBSITE www.altacit.com
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